House prices in more than 180 rural markets could fall by as much as 20% if the US economy plunges deeper into recession, according to a new study.
Experts from the research firm Moody’s Analytics said houses are “overvalued” by more than 25% in 183 of the 413 largest regional housing markets in the country.
A map based on Moody’s data was published by Fortune. It showed that house prices were on the brink of falling in so-called “bubbly” markets such as Phoenix and Boise.
Mark Zandi, the chief economist at Moody’s, told Fortune he believes US home prices will remain flat or fall by as much as 5%.
The adjusted forecast contrasts with previous predictions that house prices would remain unchanged for the next 12 months.
If the US plunges deeper into a recession, house prices could fall by as much as 10%, according to Moody’s.
The company believes the Boise market is overvalued by 72%, while homes in Charlotte are overvalued by 66%.
Moody’s analysts say the Austin, Texas real estate market is 61% above its true value.
The forecast is much more pessimistic than other reports, including those from the Mortgage Bankers Association, Fannie Mae, Freddie Mac, CoreLogic and Zillow – all of which predict a single-digit rise in home prices.
But other agencies have echoed Moody’s. Fitch Ratings said it foresees a drop in US home prices to 15%.
Robert Shiller, the noted economist who correctly predicted the 2008 housing crash, thinks there is a good chance that house prices could fall by more than 10%.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, said last week that the recent housing slump “is nowhere near bottoming, especially on prices.”
His forecast came after existing home sales fell 5.9% in July to a seasonally adjusted annual rate of 4.81 million units, according to the National Association of Realtors.
Existing home sales have fallen for six consecutive months, reaching their lowest level since May 2020.
The slump has coincided with a rise in mortgage rates over the past year, further exacerbating the affordability challenge for potential homebuyers facing steep sales prices.
Additional reporting by Thomas Barrabi
#House #prices #fall #cities #data #shows